July 19, 2022
Finance Department
DATE: July 19, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Anil Comelo, Interim Deputy City Manager
Delmy Cuellar, Director of Finance
Subject:
Mandatory Disclosure Training on Issuance of Taxable
Pension Refunding Bonds, Series 2022 ("2022 Refunding
Bonds")
FINANCIAL IMPACT: Potential increase in annual debt service required because of need to fund termination payment on an
interest rate swap. Potential future interim General Fund budget savings because of term extension.
PREVIOUS COUNCIL
ACTION:
April 6, 2021; October 5, 2021; December 7, 2021, June
7th, 2022, June 21, 2022
STATEMENT OF THE
ISSUE:
On June 21st, the City Council approved a resolution
authorizing the issuance of refunding bonds for the 2005 Pension Obligation Bonds. The Disclosure Training is
helpful for the City when reviewing the disclosure
document which will be used to sell the bonds and which will be considered by the city at a later meeting.
RECOMMENDED ACTION:
RECEIVE Mandatory Disclosure Training – Finance
Department (Delmy Cuellar 510-620-6740).
AGENDA
REPORT
July 19, 2022
DISCUSSION:
The Securities Exchange Commission ("SEC") regulates the disclosure of information to potential investors regarding municipal bond transactions. These regulations assign legal responsibility for the adequacy of this disclosure to the public entity issuing the bonds. Accordingly, the best practice in public finance is to brief both electeds and staff regarding SEC disclosure requirements prior to the issuance of any new municipal debt obligation. This briefing will be conducted by the law firm retained by the City to prepare the disclosure documents for the proposed 2022 pension obligation bond ("2022 POB") refinancing, Best, Best & Krieger. Representatives of the two bond underwriting firms retained by the City, Loop Capital and Hilltop Securities, will also be at the City Council meeting. Note that Best, Best & Krieger will give the City a legal opinion regarding the adequacy of the investor disclosure document for the 2022 POB. However, as noted above, the City is still legally responsible for the adequacy of investor disclosure document.
Next Steps. During the regular part of the July 19th, 2022 City Council Meeting, City Council will receive information on the Issuance of Taxable Pension Refunding Bonds, Series 2022 ("2022 Refunding Bonds").
The City Council will be asked to consider approval of other legal documents required for the 2022 Refunding Bonds at its meeting of July 26th. At that time, the City Council will need to make a final decision on whether or not to extend the term of the 2022 Refunding Bonds, and if so, by how much.
Assuming City Council approval of the other legal documents required by the 2022 Refunding Bonds, as well as the final recommendations on the financing plan, as described above, anticipated at the Council meeting of July 26th, the 2022 Refunding Bonds will be sold in approximately late August.
DOCUMENTS ATTACHED:
Attachment 1 – City Council Disclosure Training